By Marie Brown

SACRAMENTO (OBSNews.com) – Mortgage loans backed by the United States government such as FHA and VA loans fell out of favor during the housing boom, but their use has been skyrocketing lately, according to the Mortgage Bankers Association (www.MBAA.org).

According to the MBAA the level of applications for mortgage loans insured by the government rose to 35.9 percent in June of 2009, the highest number in almost 20 years. The figure is up 27 percent compared to a year ago and up from 25.7 percent in May. The lowest percentage on record since 1990 was in August of 2005 at a mere 5.8%

“A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans,” said Orawin Velz, MBA’s Associate Vice President of Economic Forecasting in a statement on the association's website.

In the Sacramento real estate market brokers and agents report that much of the current home buying and selling is focused on first-time homebuyers. Because these would be house buyers are usually younger and less affluent than other real estate purchasers the lowered down payments associated with these loans is a large incentive.

Additionally, lending standards have tightened considerably for other companies who lend money for home mortgages, in part because of the difficulty of obtaining private mortgage insurance in the wake of the housing crash.

"The applications for government-backed loans shows how difficult it can still be to get a loan that is backed by private mortgage insurance," said Patrick McGilvray, president of Sacramento based real estate brokerage The Home Buying Center (www.TheHomeBuyingCenter.com).